Feb 1, 2022 - Energy & Environment

Exxon's profits soar on higher oil prices

Graph showing ExxonMobil stock vs. S&P 500
Data: FactSet; Chart: Will Chase/Axios

Exxon reported $8.9 billion fourth-quarter profits and unveiled a major restructuring in developments that show its pandemic recovery and efforts to find footing in a changing landscape.

Driving the news: The multinational giant's quarterly and annual 2021 profits announced today — both the highest since 2014 — came on the strength of higher oil and gas prices and the energy demand recovery.

  • Overall, Exxon posted $23 billion in full-year earnings and initiated a $10 billion share buyback effort.
  • CEO Darren Woods, in a statement, touted its pandemic response, "focused investments during the down-cycle" and cost-savings that "positioned us to realize the full benefits of the market recovery in 2021."

Catch up fast: It follows Monday's announcement of structural changes and plans to move its corporate HQ from the Dallas area to Houston.

  • Exxon's merging its chemicals and refining into one unit called the "Production Solutions," and making the "Low Carbon Solutions" unit formed a year ago into one of three formal business lines.
  • The upstream unit is the third, and they'll all be supported by a single tech and engineering division.
  • Exxon called the moves part of its wider, ongoing efforts to achieve $6 billion in corporate cost savings compared to 2019 levels.

Zoom in: Spokeperson Casey Norton tells Axios that the change elevates the low carbon division and enables it to "leverage the full capabilities and scale of the corporation."

  • Jack Williams, a senior VP, tells Reuters it gives Exxon more flexibility to redirect investments to adjust to energy transition.

What they're saying: "Making low-carbon one of Exxon's three primary business units creates the potential for that business to grow into a more equal status over time," Andrew Logan, an oil expert with the sustainable investment advocacy group Ceres, tells Axios.

  • "But that's really all it represents right now — potential," Logan said via email. Logan said he's waiting to see how its low carbon budget grows and whether Exxon widens its efforts beyond carbon capture and biofuels.

The big picture: The restructuring is the latest step in Exxon's repositioning in recent years amid the pandemic and uneven financial performance even before it.

  • Exxon is planning $20 billion to $25 billion annually in capital investment through 2027, which are lower targets than its pre-pandemic plans.
  • And it's part of Exxon's — and the industry's — wider shift on climate amid activist and investor pressure.
  • Last year Exxon pledged to invest $15 billion-plus over six years in low carbon efforts, focusing on carbon capture, hydrogen and biofuels.
  • It has also been setting various new emissions targets. Some of the moves come after activist hedge fund Engine No. 1 succeeded last spring in placing three new members on Exxon's board.

By the numbers: Exxon suffered huge losses in 2020 but its market performance has been on the upswing, with its stock rising 20% so far in 2022 and 70% over the past year.

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